Union Budget 2025 tax changes: New slabs, how do they benefit you - All FAQs answered
Business & Economy, India news: With the new tax slabs, Sitharaman has announced that individuals earning up to Rs 12 lakh annually will no longer be taxed.
Finance Minister Nirmala Sitharaman on Saturday (Feb 1) introduced significant changes to income tax regime in the Union Budget for the financial year 2025-26. The government has revised personal income tax rates for taxpayers to encourage spending. Previously, under the 2020 tax system, annual earnings of up to Rs 15 lakh were taxed at rates between 5 and 20 per cent, while those exceeding Rs 15 lakh faced a 30 per cent tax.
However, with the new tax slabs, Sitharaman has announced that individuals earning up to Rs 12 lakh annually will no longer be taxed.
Also read: Union Budget 2025: FM Sitharaman proposes to include Crypto assets in assessing undisclosed income
Here are some frequently asked questions (FAQs) released by the government:
What is the new tax regime?
The new tax regime offers lower tax rates and broader income slabs. However, deductions are not permitted under this system, except for specific cases such as 80JJAA, 80M, and standard deductions.
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What were the previous tax slabs under the new regime?
Up to Rs 3 lakh – No tax
Rs 3-7 lakh – 5 per cent
Rs 7-10 lakh – 10 per cent
Rs 10-12 lakh – 15 per cent
Rs 12-15 lakh – 20 per cent
Above Rs 15 lakh – 30 per cent
What are the revised tax slabs under the Finance Bill 2025?
Up to Rs 4 lakh – No tax
Rs 4-8 lakh – 5 per cent
Rs 8-12 lakh – 10 per cent
Rs 12-16 lakh – 15 per cent
Rs 16-20 lakh – 20 per cent
Rs 20-24 lakh – 25 per cent
Above Rs 24 lakh – 30 per cent
What is the maximum income level with no tax liability?
Under the proposed new regime, individual taxpayers will not have any tax liability if their total annual income does not exceed Rs 12 lakh.
How can taxpayers benefit from zero tax liability?
The benefit of zero tax liability is only available under the new tax regime, which is now the default system. To claim the rebate, taxpayers simply need to file their income tax returns (ITR); no additional steps are required.
How does the new tax rate impact individuals earning Rs 12 lakh?
Previously, individuals earning Rs 12 lakh had to pay Rs 80,000 in taxes. Under the new system, they will not be required to pay any tax.
Has the income threshold for zero tax payments increased?
Yes, the threshold for no tax payments has now been increased to Rs 12 lakh, provided taxpayers file their ITR to avail of the rebate.
Is the standard deduction on salaries applicable in the new tax regime?
Yes, a standard deduction of Rs 75,000 is available. This means salaried individuals earning up to Rs 12.75 lakh before the standard deduction will not need to pay any tax.
Is the standard deduction available under the old regime?
Under the old tax regime, a standard deduction of Rs 50,000 is applicable.
How many taxpayers will benefit from the revised rates and slabs?
For the financial year 2024-25, approximately 8.75 crore individuals have filed income tax returns. All taxpayers who were previously paying taxes under the new regime will benefit from these revised rates and slabs.
(With inputs from agencies)
